A leasing company sends a temporary employee to a client company for a term of work that will continue up until such a time as the temp performs the required assignments. The client company provides all of the work materials, training, and supervision of the temp employee. It controls the temp’s hours and days of work. Each week, the temp fills out a time sheet provided by the leasing company, which is countersigned by a supervisor at the client company. The leasing company issues a paycheck to any temporary employee they send out on assignment for each week a time sheet is submitted. They also deduct all of the appropriate federal and state withholding’s and pay the necessary payroll taxes.
One day, however, while at the work site, another employee negligently creates a hazardous situation resulting in the temporary employee being injured on the job. The staffing company, if deemed responsible, will need to have staff insurance that provides workers comp claims, but who is ultimately responsible for the care of the injured temp worker?
Is the temp an independent contractor or employee?
The first step is to determine whether the temp was actually a permanent employee of the client company, the leasing company, or both. The IRS evaluates whether a worker is an independent contractor or an employee because they are more likely to receive payroll taxes and withholding’s from employers than income taxes from independent contractors.
In general, what these criteria will focus on is whether the employer has control over the worker and the method of completing the job. For instance, an employer (as opposed to a company contracting with an independent contractor) is more likely to provide the work materials and tools necessary to do the job, set the hours and days of work, and monitor the person’s ongoing work.
The determination of who is the employer will ultimately be a fact-based decision by the court assigned to hear the case. The leasing company, the client company, or both can end up being considered the employer, which serves as a perfect example of why staff insurance is required for when situations arise that result in a workers comp claim.